$667M in business tax cuts advances in Texas House

PAUL J. WEBER,Associated Press

AUSTIN, Texas (AP) — A major tax bill proposing $667 million in breaks for Texas businesses cleared the state House on Tuesday night against the backdrop of Gov. Rick Perry demanding muscular tax relief as the Legislature enters a furious final three weeks.

The first major tax bill of a surprisingly harmonious 140-day legislative session provoked sharpened political jabs, parliamentary stall tactics and frustrations. One Democrat struck some levity by fiddling with an abacus, but the prop also was a reminder of the challenge of keeping track of $270 million in cuts that were added on the House floor before weary legislators finally adjourned after more than five hours of sometimes heated debate.

“I’m optimistic about the last few weeks,” said Republican Rep. Harvey Hilderbran, who chairs the House’s tax-writing Ways and Means Committee. “If we don’t get it done, we’ll come back to get it done.”

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The bill still needs to clear a final, procedural vote in the House before moving to the Senate.

Left unsaid during Tuesday’s debate: a fresh warning from Perry that the Republican-controlled Legislature pass “significant” tax relief before adjourning May 27. Perry has called for $1.6 billion in tax cuts, and he vowed last week not to sign a new state budget if lawmakers don’t deliver.

None of the cuts approved 112-27 by the House are property or sales tax reductions for Texas taxpayers. The cuts instead benefit businesses through changes to the state’s franchise tax — the maligned business tax that sours both Republicans and Democrats but is the state’s third-biggest source of revenue.

Conservatives grumble that the tax is applied unevenly to big and small companies. Democrats grouse that the tax has underperformed since being overhauled in 2006.

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Hilderbran said more businesses breaks benefit Texas residents by giving their employers more stability and money to grow. He also sought to win over members of both parties with an appeal that the changes would spread fairness.

“I want the little dogs to get fed. That’s what this bill is going to do,” Hilderbran said.

His bill proposed $397 billion in cuts coming into Tuesday. After the House slogged through nearly three dozen amendments, the cost spiked nearly 70 percent.

Democratic state Rep. Sylvester Turner, who led the resistance to the package of cuts, sparred with Republicans over ideology and the fact that revenue to the state fund for public schools goes down as business tax cuts go up.

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No money is earmarked for the tax cuts in the $93.5 billion state budget passed by the House last month. Democrats protested that the hefty tax cuts would wreck a spending bill that the House passed overwhelmingly with bipartisanship.

“Mom and dad want a tax break,” Turner said. “I will vote for a tax break for mom and dad. I do not support special interests. I do not care if it’s a welfare mother or a corporation.”

Tax cuts are not the only the big items left on the agenda. Ambitious plans to build new water pipelines and repair crumbling and congested Texas highways remain unsettled, as the House and Senate have yet to agree on how to finance infrastructure funds that could cost upward of $5 billion.

Both chambers have approved new budgets — the only bill the Legislature is constitutionally required to pass — but differences are still being hashed out.

Also still in the balance is how much lawmakers will roll back $5.4 billion slashed from public schools in 2011. The Senate has passed measures that would restore nearly 70 percent of those cuts, a sliver of which would come through drawing down from the state’s Rainy Day Fund. Yet there is House opposition to raiding that emergency piggybank and its projected $12 billion balance.